The State Bank of Pakistan (SBP) on Tuesday said it has called a meeting of its Monetary Policy Committee on March 2 — two weeks earlier than scheduled — when it is expected to raise the main policy rate.

“The forthcoming meeting of the Monetary Policy Committee has been preponed and now it will be held on Thursday, March 02, 2023,” the SBP said in a brief statement.

The next meeting of the central bank’s Monetary Policy Committee was initially scheduled for March 16. Off-cycle rate reviews are not uncommon though.

Pakistan is undertaking key measures to secure International Monetary Fund (IMF) funding, including raising taxes, removing blanket subsidies, and artificial curbs on the exchange rate. While the government expects a deal with the IMF soon, media reports say that the agency expects the policy rate to be increased as well.

Market participants in a recent treasury bill auction are expecting at least a 200 basis points increase in the policy rate, which stands at 17 per cent. The expected increase is based on the rates the government set in the auction to raise the funds.

The government raised Rs258 billion in the auction on February 22. The cut-off rates for the three-month, six-month, and 12-month tenors jumped 195 bps, 206 bps, and 184 bps higher than the previous auction.

The SBP has hiked rates by 725 bps since January 2022, with the last rise of 100 bps coming in January. At the time, the bank had said the move was aimed at tackling rampant inflation.

But shortly after that, annual inflation for January clocked in at a five-decade high of 27.5pc.

The recent hikes in gas tariffs and the general sales tax are yet to be incorporated, which is leading to expectations of the Consumer Price Index jumping close to 30pc in February.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

No time left
Updated 06 Feb, 2025

No time left

Climate change concerns continue to remain a footnote as politics dominates national discourse, surfacing only when disaster strikes.
Karim Aga Khan
06 Feb, 2025

Karim Aga Khan

PRINCE Karim Aga Khan was a man who straddled various worlds and cultures. Beyond his role as spiritual leader of ...
Cotton production
06 Feb, 2025

Cotton production

PAKISTAN’S cotton crop is on the ropes. The crop output has been falling since FY15, when the country harvested a...
Kashmir question
Updated 05 Feb, 2025

Kashmir question

The important thing is to continue dialogue process, on bilateral disputes, Kashmir issue, and move beyond rigid positions.
Letters from jail
05 Feb, 2025

Letters from jail

OVER the past week, former prime minister Imran Khan has directly addressed his concerns to both the chief justice ...
Agriculture tax
05 Feb, 2025

Agriculture tax

WITH Sindh and Balochistan finally approving changes to their agriculture income tax laws to harmonise their AIT...